Get Ready for Change, Washington Style

Now that the election is over, we have a good sense of the people who will drive pension and retirement policy and their positions. While no one can really predict what regulators and Congress will do, we do have a pretty good idea of the themes that will drive future action:
• Fee disclosure and transparency
• Definition of fiduciary
• Coverage for more people   Read More

Is Value Add Valuable?

A study of 2,000 advisors across distribution channels conducted by LIMRA and McKinsey shows that even though providers have increased value added services over the last 10 years by 40%, most of them are poorly delivered and not valued by advisors. Other highlights show that more advisors are teaming up with other specialists and that advisors that focus on retirement planning for their clients are more productive.   Read More

New Tool Decodes Disclosure Regs

Some liken the recent fee disclosure regs and the preparation for it to Y2K – others say it has just been a big waste of paper. Regardless, it’s not going away, and fees and transparency are front and center in the minds of employers and participants. The question is: How can participants really calculate how much they are paying in English and how does that compare? A new online tool claims to help participants plan determine their costs within a 401(k) plan — going beyond the DOL’s recent revisions to the 408(b)(2) and 404(a)(5) reporting requirements.   Read More

BlackRock’s Bob Doll Joins Nuveen

With the economy slowing and expected to be slow for a while, it will only become harder and harder for active equity managers to deliver returns. There doesn’t seem to be a silver bullet — so many firms turn to experienced portfolio managers with good histories to guide them. To that end, Nuveen Investments has recently hired Bob Doll, a well-know figure in the DC market and speaker at many industry events, to be their Chief Equities Strategists and Senior Portfolio Manager.   Read More

The Biggest RIAs get Bigger as the Channel Attracts More Advisors

The growth of RIA firms continues, fueled by recruitment, breakaway brokers and clients putting more money into the channel, according to a study by the market research firm Cerulli Associates. Bigger firms (those with more than $1 billion) are gaining market share more quickly and achieving scale — but lack of access to capital is limiting them. Smaller firms (those with less than $100 million) are struggling, especially with maintaining sustainable price points. Hybrids or dual registered advisors grew fastest, with 17% indicating that they are willing to drop their broker dealer affiliation.   Read More

Advisor Win/Loss Studies Reveal More Sophisticated Plan Sponsors

According to research involving DC plans with over $6 billion in assets conducted on behalf of advisors by Chatham Partners — famous for their provider win/loss studies — 81% of plan sponsors sought advisors through referrals, with very few responding to cold call solicitation. An average of five advisors were selected for each opportunity. Personal fit was cited most often as the criterion for selecting an advisor, followed closely by pricing and experience, with personal relationships a distant fifth.   Read More

Decline in Participation Rates Halted, But Still Low

According to the Employee Benefit Research Institute (EBRI), the three-year decline in participation rates precipitated by the Great Recession halted in 2011, as 54% of full-time workers age 21-64 participated in their employers’ retirement plans. With participation rates so low, employers and employees alike need to be made acutely aware that unless people don’t expect to retire or have other sources of capital, participation in a DC plan should not be an option.   Read More

Case of the Week: Relief for Hurricane Sandy Victims

The ERISA consultants at the Columbia Management Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with an advisor in New York is representative of a common inquiry related to relief for Hurricane Sandy victims.   Read More

Mercer: Employees Prefer Benefits with Short-term Value

In today’s world of instant gratification, it’s no wonder that workers value short-term benefits the most. According to a worldwide study of more than 10,000 workers conducted by Mercer, a salary increase was preferred over all types of benefits. While saving for retirement may seem to some like saving for a stranger, U.S. workers did rank DC plans and DC matches as the second and third most popular benefit — topped only by health care.   Read More

Stable Value Offers Shelter from Bond Bubble

Forbes’ Janet Novak highlights many of the benefits of a stable value fund, especially in a rising interest rate environment. For example, with $650 million in assets, the stable value asset class is widely misunderstood, creating a great opportunity for retirement plan advisors to differentiate themselves; and with proper protections in place, most stable value funds — even in an extreme rising interest rate environment — should maintain their principal and most of their yield.   Read More

‘Save My 401k’ Campaign Aims to Protect 401(k)s from Tax Reform

NAPA and ASPPA have launched the Save My 401k campaign to protect the tax incentives of employer-sponsored retirement plans from the threat of tax reform. The goal: to educate members of Congress and urge them to preserve those tax incentives. “The single most important factor in determining if a worker is saving for retirement is whether or not there is a plan at work. Last time Congress took up tax reform in 1986, employees 401(k) plans were cut by 70%, resulting in a mass termination of plans,” said Brian Graff, ASPPA’s and NAPA’s Executive Director and Chief Executive Officer.   Read More

Provider Fees and Revenue Declining

In a survey conducted by NEPC, a DC and pension consultant with almost 100 DC plans, fees and revenue charged by record keepers dropped 5 basis points over the 15-month period ending March 31, 2012. According to NEPC, revenue related to record keeping, custody and trust also dropped 11%. NEPC surmised that providers were lowering their fees in anticipation of the disclosure regulations, but the firm also saw record keepers shift revenue to monies received from investment firms on their platform.   Read More

Creating the Ideal 401(k) Plan (Part 2)

At the second TRAU Group Study Session, where more than 40 C(k)P candidates gathered recently at Transamerica’s downtown Los Angeles headquarters, advisors and industry professionals were asked the same questions as the C(k)P candidates who gathered in Boston a month earlier — questions related to improving participant outcomes, what’s working and what’s not working.   Read More

Ameriprise Workers’ 401(k) Suit Moves Ahead

If you thought lawsuits against 401(k) plans were dead, think again. Renowned plaintiff’s attorney Jerome Schlichter won a battle against Ameriprise when a federal judge in St. Paul, MN refused to dismiss Schlichter’s case, which claims that the 14,000 participants in Ameriprise’s $1 billion plan paid higher fees than they should have because proprietary funds were offered on the platform.   Read More

Study of Danish Pension Plans Questions Effects of U.S. Tax Incentives

Using data from Denmark, an academic researcher showed that tax breaks for retirement savings have little effect on how many people save, especially those with lower incomes. As reported in a New York Times blog on economics, the researchers used Danish data because it was more detailed and because the U.S. and Danish pension systems are similar. Among the questions raised in the research were whether participants in auto plans offset savings elsewhere, and whether so-called passive savers — who tend to be lower income — change their behavior as a result of changes in the tax incentives.   Read More

A New Look at the Investment Habits of Affluent Versus Non-affluent Investors

New research from Wells Fargo details the differences in the savings and spending habits of affluent investors (those with assets in excess of $250,000) and those with less than $250,000 in savings. More than 50% of affluent investors utilize equities as a large portion of their asset allocation, the survey found (among other things), while just 35% of the non-affluent prefer stocks and would rather invest in cash, CDs, fixed income, etc. — a key point for many retirement plan advisors who are dealing mostly with less affluent investors.   Read More

Fiscal Cliff is Affecting the Market

Though the market rebounded last week, investors pulled out of equities, according to a Lipper report for the week ending Nov. 21. It may have been the threat of the impending fiscal cliff that caused the largest weekly outflow of money from mutual funds and ETFs since late July. On the other hand, over $20 billion moved into money market funds, compared with just $5.5 billion the previous week. In addition, $1.82 billion went into muni bond funds — the second highest amount in 21 years — with investors trying to avoid potential increases in investment tax rates.   Read More

In Case You Missed It…

Last Wednesday’s NAPA Net Daily included two noteworthy stories. If you missed that issue because you were in a rush to get to Grandma’s house, the stories described Ascensus’ acquisition of ExpertPlan and additional time for ING to divest its U.S. holdings under the terms of a deal it made with the European Commission, the European Union’s executive arm.   Read More